
Book ^U 3 

GopghtN" 



COPYRIGHT DEPOSIK 



^^ 



4 



HOW TO 
SELL BONDS 




BY 

Manager, Selling Department 

BEYER & COMPANY 

**The Hundred Dollar Bond House" 

National City Bank Building 

55 Wall Street, New York 



.L3 



Copyright, 1914, 
By Beyer & Company 



Printed in the United States of America 



Composition, Press Work and Binding 
By L. H. Jenkins, Kichmond, Va. 



MAR -5 1914 



TABLE OF CONTENTS 



PAGE 

Foreword . . . . . . • . *? 

The Nature of Your Task ..... 9 

The Secret of Selling Power .10 

The Part Played by Sentiment in Business 12 

Means of Getting Clients . . . .15 

Planning a Systematic Campaign .17 

Starting A Craze FOR Saving . . . . .19 

How TO Deal With Objectors . - . .21 

Objections and Questions You are Likely to Hear 

Raised. ....... 25 

Why BusijNESS Men Should Buy Bonds . ... 33 

"And Interest" Fully Explained . . . .37 

Why Bonds are Better than Real Estate Mortgages 39 
Books You Ought to Read . . . . .41 

A Lesson in Thrift (Showing the Good that Every 

Bond Salesman Can Do) . . . . .43 



''DO YOU THINK? IF NOT, YOU 
DESERVE TO BE A FAILURE. 
PERHAPS YOU SAY YOU 
HAVEN'T TIME TO THINK— YOU 
HAVE TOO MUCH WORK TO DO. 
BUT HEEDLESS WORK IS PROF- 
ITLESS. YOU MUST THINK OR 
FAIL. TAKE YOUR CHOICE." 



FOREWORD 

I, of course, do not know just what experience you 
have had, either in finance or in selling things in general. 

I believe, however, that the best way I can help you 
make plenty of money as the representative of Beyer & 
Company is to assume that your experience both in 
finance and in selling things has been rather limited. 

Even if I tell you things which you already know, it 
will do you no harm to hear these things again. There 
are certain principles of successful salesmanship to which 
we cannot have our attention called too often. As a 
matter of fact, when I here struggle to present these 
principles to you in definite form, I shall thereby be get- 
ting them more firmly fixed in my own mind, and thus I 
shall be helping to educate myself. 

Then I expect to be able to give you much practical 
information about the bond business, show you how to 
overcome certain specific objections you are likely to 
hear raised, etc. 

Anyway, I sincerely trust that, before you attempt 
to sell any bonds, you will give this little book your care- 
ful and thoughtful attention. 

Remember, please, that the leaders in all professions 
are always STUDENTS, and always remain students up 
to the close of their active career. A know-it-all never 



8 FOREWORD 

amounts to much in any walk of life. The greatest men 
are always the humblest. They are the most childlike in 
their teachableness. 

As I say, this is true in all walks of life ; but I think 
it is particularly true in the bond business. Finance is a 
subject of many sides. There is always something for 
all of us to learn about it. I hope, then, that as the repre- 
sentative of Beyer & Company, you will study, study, 
study all the time. 

It will be well worth your while to do this. The 
bond business is a COMING business. Why, the full 
possibilities of it are, in this country, just beginning to 
be realized. Heretofore it has been confined to a limited 
class. Now it is in process of being POPULARIZED. 
Just as in France, practically everybody in this country 
is going to be a bondholder. 

And there is no reason why you should not AIM 
HIGH in this great and growing businss. From now 
on there will be a greater and greater call in this business 
for trained men. My own house will need more and 
more of them. The possibilities of advancement before 
you are endless. 



HOW TO SELL BONDS 



The Nature of Your Task 

No matter what he is dealing in, the task of the 
salesman is essentially that of creating for his proposi- 
tion a favorable sentiment. 

What you will have to create a favorable sentiment 
for is (1) standard in bonds in general and (2) the Special 
Issues of Beyer & Company. 

It will do you no harm to realize, right at the start, 
that you cannot accomplish this task by lying around on 
a flowery bed of ease. 

This task will demand of you good, hard, faithful and 
conscientious work. 

In some quarters you will encounter stupid indif- 
ference and blind prejudice. There will be even people who 
will try to tell you that you are all wrong. 

What then.? Is that going to faze you.'^ I think not. 

If your task were merely to go out and sell people 
something which they already had decided to buy, you 
wouldn't be a salesman — you would be a mere order taker, 
and any bright boy, or any old has-been who would jump 
at the chance to make $10 a week, could hold down your 
job. 

"He is great," says Emerson, "who can alter my 
state of mind." 

That is where the salesman comes in. It is for him to 
alter people's states of mind — to make thtm stop thinking 
as they think and begin thinking as he thinks. 



10 HOW TO SELL BONDS 

That is the beauty of the business. That is why a 
great salesman is a great man. That is why he earns 
thousands of dollars where little office people are earning 
hundreds. 

I don't say that after a while the people won't come 
flocking to you. Truth to tell, this is bound to occur. It 
has been frequently observed that people are much like 
sheep. When they see others beginning to buy a thing, 
they fall all over themselves to buy it, too. 

Once you get a favorable sentiment started in your 
community for bonds and the Special Offerings of Beyer 
& Company — once people begin to draw their interest 
on these bonds regularly — once they find that they can 
sell these bonds without any trouble or borrow money on 
them without trouble — once their confidence in you and 
us is fully established, — business will come to you for 
which you will not have to lift a finger to gain. 

But while you then, in a sense, will become a mere 
ordertaker, you will be legitimately entitled to the harvest, 
because it was you who prepared the ground, it was you 
who sowed the seed. 

It will be your business, yours to have and to hold. 

The Secret of Selling Power 

Some salesmen find it very easy to get a favorable sen- 
timent started. They are men who make their presence felt 
as soon as they enter a room. It seems only natural that 
everybody should defer to them, should think as they think 
and do as they wish. 

Is it that these men come into the world blessed with 
a kind of magnetism that is peculiar to them? I think 
not. I think that the secret of the power wielded by these 
master salesmen is easy to find and is open to anyone to 
cultivate. 



HOW TO SELL BONDS 11 

I think that their power can mainly be explained by 
the fact that they are terribly in earnest. They them- 
selves have a deep, subjective conviction that what they 
offer is a good thing, and they are grimly resolved that you 
shall see it as they do. 

The secret of their mastery is mainly contained in 
two little words. THEY BELIEVE. 

Conviction is bom of conviction. Belief is created 
by belief. This must be so, because it is only the same as 
saying that to start a fire you need a firebrand. 

I hope you are terribly in earnest about this bond 
business. I hope you are deeply convinced that a nation 
is strong as its people save more than they spend, and that 
there is no better way of saving than by putting your 
money into good, well-secured, standard bonds. I hope 
you believe with aU your heart that the Special Offerings 
of your house are to be confidently recommended to your 
nearest and dearest friends, to say nothing of people in 
general, and that nothing could be better than these bonds 
for small investors particularly. 

You will remember that I went into all this in my 
booklet called "Representing Beyer & Company." I wish 
you would read tliis booklet over again — aye, study it 
until the princiiples there laid down are as familiar to you 
as the faces of your friends. // you have mislaid this book- 
lety send for another copy, and do it now. 

One thing I can assure you of is this: Here in all 
likelihood is the greatest opportunity you ever have had 
to let yourself go. Don't be afraid to let yourself go. 
More people fail through lack of zeal than from any other 
one cause. Even if you personally had nothing to gain 
by it, you, as a good friend, a good neighbor and a good 
citizen, might very well devote a large part of your time 
to urging people to spend less and save more— to cease 



12 HOW TO SELL BONDS 

from their habits of reckless extravagance and acquire 
the habit of systematically laying aside a substantial part 
of their income for the purchase of standard bonds. 

Now, be honest with yourself. How much do you 
really believe in what you have to sell? I have said that 
you ought to be ready to recommend these bonds to your 
nearest and dearest friends. But that is not the real test. 
The real test is this: To what extent are you ready to 
take your own medicine .f* In other words, how many of 
your bonds do you yourself own? All that you really 
ought to own? 

Remember that, as you yourself belive, others will 
believe. Remember, that, at the last analysis, your strong- 
est argument will be that you yourself are an investor in 
the offerings of your house — that you have put your own 
money into your bonds, and put all that you ought to 
put consistent with your income and that principle of 
"diversity" about which I talked to you in "Representing 
Beyer & Company." 

Remember, too, that as jon really believe, as you are 
deeply convinced, as you are sincerely in earnest, your 
work will not seem like work — to follow it, to study it 
night and day, to persist in it day in and day out, this will 
be your greatest pleasure. 

The Part Played by Sentiment in Business 

Next to belief as a factor in creating that personal 
force which we call magnetism, I would place sympathy — 
that is, the feeling we have for our fellow human beings 
when we really like them and wish them well. 

Nobody of any sense fails these days to recognize 
the value in business of soul as well as brains. The sales- 
man who is all head may win out, but he would win out a 
great deal bigger if he would cultivate those sympathetic 



HOW TO SELL BONDS 13 

qualities which enable you to get close to people anl play 
upon their heart-strings. 

It is an important facty and one of great significance 
for the salesman, that the great majority of people are 
influenced to a greater degree by their feelings or senti- 
ment than they are by their judgment. 

You know how it is yourself : When a genial, whole- 
souled person comes along who makes you feel the warm 
touch of human brotherhood, who somehow creates the im- 
pression that your concerns are to him the most interest- 
ing thing in the world — why, you are ready to do almost 
anything that person desires. 

Therefore it behooves all of us salesmen to get a little 
sunshine in our souls — to get in heart accord with all our 
fellows. If we have any worries and anxieties, we must 
forget them. As salesmen we must be dispensers of opti- 
mism — men whose skies are always blue, and who, having 
no troubles ourselves, have plenty of sympathy for other 
people's. 

I admit that these methods suggest those of the con- 
fidence man. But I believe in them none the less on that 
account. I think that the way confidence men go about 
influencing people is very admirable. Their methods are 
all right — it is only their object that is despicable. 

And here is the particular point: if so many people 
can be influenced by a sham appearance of sympathy and 
kindness, it shows what can be done by a real appearance 
of sympathy and kindness. 

Make no mistake about it, real sympathy for people 
can be cultivated. You would not hate your worst enemy 
if you could see all that was in his heart — if you could 
know all that he has to struggle against. The more you 
know about people, the more pains you take to understand 
them and to find out why they are as they are, the more 



14 HOW TO SELL BONDS 

you will like them, the more you will feel drawn to them, 
the more you will desire their highest and best good, 

I would not have you sell a single bond to a person 
unless you thought it was to his interests to own it. I 
would have you take pains to find out all about the circum- 
stances of your clients, and advise them strictly in ac- 
cordance with their own best interests. If you come 
across a man who has saved up to say $300, and taking 
into consideration the principle of diversifying investments, 
you think his circumstances are such as to make it inad- 
visable for him to take more than one of your $100 bonds, 
I would have you tell him so and advise him where to 
place the rest of his savings, even if this advice results in 
your not making as much money as you otherwise might 
have made. 

As a matter of fact, the loss you thus suffer will be 
only a temporary one. Even if that particular person 
does not come back to you again, taking losses of this 
kind is one of the things that will draw people in general 
to you, and cause them to give you freer and freer access 
to their pocketbooks. 

You see, we too are in the business of gaining people's 
confidence — the confidence of people in us is by far our 
greatest asset. And we are no more in business for our 
health than is the confidence man so called. But here is 
the difference: whereas the confidence man aims to make 
a quick clean-up and get-away, we aim to continue doing 
business with the same people year in and year out. And 
when this is our aim it is strictly to our own interests not 
to be greedy and selfish, but to be really sympathetic and 
kind- — not to grab everything there is in sight, but to 
make sacrifices today for the sake of a greater gain 
to-morrow. 



HOW TO SELL BONDS 16 

Means of Getting Clients 

As you deal in bonds that are absolutely sound — 
bonds in which you, without the least hesitation, invest 
your own money — you can, of course, for the purpose of 
making clients, utilize your acquaintanceship as far as 
it extends. 

There are your business acquaintances, even the small 
tradespeople with whom you deal — the butcher, the 
baker and the grocer. 

And there is no doubt that, by exercising tact and dis- 
crimination, you can establish business relations with the 
people with whom you have social relations. 

Seek also to extend the circle of your acquaintance 
as far as possible. Be ever on the alert to make the men 
you know help you to meet the men you do not know. 
Connect yourself with all the social, business and religious 
organizations that you can. 

If I were you, I should make it a point to get ac- 
quainted with clergymen especially. Clergymen are in 
the business of making good citizens, and so are you. 
Clergymen are in a particularly good position to see the 
misery that comes from extravagance, waste and improvi- 
dence, and you, with your sound bonds small and large, 
are a missionary in the cause of saving, prudence and 
thrift. 

Remember that practically everyone you come 
across is a live prospect for your bonds. Everyone ought 
to put some money in bonds of your kind, and everyone 
can when you have bonds in denominations as low as $100 
and these can be bought in small payments distributed 
over a year. 

It goes without saying that people whom it is particu- 
larly desirable for you to meet are those who have savings 



16 HOW TO SELL BONDS 

bank accounts, those who have just been left some money 
or just have sold some property, and young married 
couples who want to begin saving systematically, either 
for themselves or their children. 

Very often you can accomplish much by writing a 
judicious letter to people with whom you are not ac- 
quainted, but who you have reason to believe are in a 
good position to buy your bonds. Any letter that will 
excite sufficient curiosity to induce people to ask you' for 
further information will be equivalent to an introduction. 

With your letter you may find it advisable to en- 
close some of the printed matter issued by us, especially 
if you have reason to believe that the person whom you are 
addressing is not very familiar with the nature of bonds. 
And it is always advisable in your letter to call attention 
to some paragraph in your prnted matter that you have 
marked; for people will take time to read a marked para- 
graph when they would throw an unmarked document into 
the waste basket, and if you can get a person to read a 
marked paragraph, he thereby may be induced to read the 
whole document. 

Remember always that one of your strongest argu- 
ments with investors of all classes is contained in that 
principle of diversity. People, in other words, should not 
put all their eggs in one basket, and each particular bond 
issue of ours is a basket into which each of your clients 
ought to put some eggs^ if only one. 

Remember also and always that the best way to gain 
more clients is to render those you have the best service 
that is within your power. , 



HOW TO SELL BONDS 17 

Planning a Systematic Campaign 

It has frequently been remarked that it is astonish- 
ing how much more a man can accomplish when he has a 
definite object than when his efforts lack purpose and 
concentration. 

For example, you have placed in your hands a par- 
ticular bond issue which, because of its intrinsic merit and 
the fact that the bonds are in denominations of $100, 
$500, and $1,000 can be expected to appeal to everybody. 
Thus the field for your efforts is so broad that you are 
tempted to shoot at random. 

There can't be the least doubt, however, that a cam- 
paign systematically mapped out in advance is half won. 
When you act in obedience to a definite plan carefully 
thought out, you know at aU times just what you are doing 
and can concentrate on one thing at a time. 

In handling any bond issue, you probably will make 
a beginning by bringing it to the attention of those persons 
with whom you are personally acquainted. Very good. 
But even when working among acquaintances you will 
want to do it systematically, my suggestion being that you 
make out a list of them in the order in which it will be the 
most convenient for you to see them. 

Another way you could map out a systematic cam- 
paign, would be to prepare lists of people in accordance 
with their occupations. For instance, you might deter- 
mine to interest all the school teachers in your community, 
the clergymen, the physicians, the lawyers, etc. 

Working in this way among people of distinct classes, 
you will gain several advantages. The same arguments 
that influence one person in a given class will to a large 
extent influence the others, the experience you gain with 
one will help you with the others, and when you induce 



18 HOW TO SELL BONDS 

one to take a bond that, of itself, will carry weight with 
the others. 

Your work, as I have pointed out, is for the most part 
that of getting under way a sentiment favorable to your 
proposition, and this sentiment is more likely to spread 
among people of the same class than it would be among 
isolated individuals scattered here and there. 

In other words, you want to start and spread a 
species of mental contagion and find for it the lines along 
which it can travel with the least resistance. 

I have suggested classing people by their occupa- 
tions, because people in the same line of work form men- 
tal habits similar to one another, and are always united by 
a certain bond of sympathy, so that what affects one is 
likely to affect all the others. 

Of course, however, there are ways other than those 
of occupation by which people are sympathetically united. 
There, for example, are the people who belong to the same 
lodge, the same club, the same literary society, the same 
church or any other organization. And there again are 
the people who are employed in the same factory, store or 
office. In all these cases the rule holds good that, if you 
get one to take a bond, you are pretty sure to get many 
others. 

It goes without saying, too, that you should never fail 
to take advantage of the ties formed by blood and friend- 
ship. Whenever you sell a bond, it is always a, good plan 
to ask the buyer to refer you to all the people he knows. 
These references will act as introductions, and very often 
the person to whom you are introduced in this way will 
say: "Well, if my friend has looked this up and found 
it good enough for him, it is good enough for me." 

In starting your campaign in any definite sphere of 
business or social activity, common sense directs that you 



HOW TO SELL BONDS 19 

first approach those persons who are the most influential. 
Every sphere of activity and walk of life has its natural- 
born leaders — people who are looked up to and respected 
by all their fellows — and if you get these leaders to take 
bonds, it of course will be a very great help to you in in- 
teresting the other people. 

Starting a Craze for Saving 

At the risk of wearying you, I want to keep harping 
for yet a little while longer on this theme, that most people 
are influenced more by their feelings than by their judg- 
ment, and that your work is mainly that of getting under 
way a favorable sentiment and finding for it the lines along 
which it can travel the easiest. 

I think this is something I cannot too much empha- 
size, because I know that if you will take advantage of 
this principle, it will make all your work easier and will 
make your success certain. 

Time and time again you have heard of whole com- 
munities being seized by some craze. Sometimes the craze 
is to do sC certain dance, and sometimes it is to put money 
in a get- rich-quick scheme. 

Now, there is no reason, why honest men should leave 
it entirely to rogues to take advantage of this sheep-like 
characteristic of people. The Good Book tells us, in fact, 
that if we are to be as harmless as doves, we still can be 
as wise as serpents. 

And I want to emphasize as much as I can that, just 
as people under the influence of a craze can be made to 
rush to get religion as well as to' do the tango and the 
turkey trot, so it is just as easy to get a craze started for 
getting rich sure as it is to get a craze started for getting 
rich quick. 



20 HOW TO SELL BONDS 

People are many-sided, and what they do all depends 
upon the particular side of their nature to which you ap- 
peal. The same men who, under the influence of fear, 
will blindly trample one another to death, each striving 
to save himself — these same men will rush to sacrifice their 
lives in a perfect hell of shot and' shell when some strong 
man appeals to what is herioc in them. 

And so, when you appeal to the instinct of thrift 
in people, you can get just as widespread results as you 
can when you appeal to their instinct of greed. 

You can make people act like sheep for their own good 
as well as make them act like sheep to their certain de- 
struction. 

You can lead sheep into pleasant pastures as well as 
to the slaughter house. 

To give you a good hint of what you can do in the 
way of getting a craze for thrift started, I shall let 
Moody's Magazine tell of a little savings club that was 
started by the employees of a New Jersey factory. After 
speaking about the need in this country of inducing people 
to spend less and save more, this conservative publication 
went on to say : 

''Moody's Magazine is deeply interested in this ques- 
tion. It desires to aid in every possible movement, big 
or little, that aims to encourage systematic saving. When 
we heard of a very small effort on the part of a few 
employees of a New Jersey manufacturing concern to 
work out a plan of their own we set out at once to 
learn about it. They tried to save individually, but in 
some way the dollar a week they set aside did not 
grow into any respectable amount. Something always 
arose that tempted them to spend what they had saved. 
After exchanging experiences the young men decided 
that the motive that induced people to save was the 
desire to gain profit — to make money EARN more money. 
When a dollar a week was set aside it immediately be- 
came an idle dollar. It could be placed in a savings 
bank, but it would not begin to earn immediately. 



HOW TO SELL BONDS 21 

'The result of their investigation was the formation 
of a little savings club of their own. They elected a 
president and a treasurer-collector. Each member agreed 
to turn over to the treasurer $1 a week. When four 
payments had been made the club discussed a number 
of bonds that are sold in denominations of $50 — known 
to the trade as 'baby bonds.' Each member of the club 
picked out the bond he thought he would like to own. 
Every point was discussed — safety, income, negotiability 
—just as carefully as if the purchase were to be for 
bonds of much larger denomination. When each mem- 
ber had selected his bond the treasurer sent to Beyer & 
Company, New York, who specialize in bonds of small 
denominations, and ordered them to purchase four bonds 
— one for each member of the club. 

*'The plan is to make the weekly collections until each 
member has paid $50, or the amount sufficient to pay 
for the bond selected. When the payments are com- 
pleted each member will receive his bond. Each will 
then have become a bondholder, an investor and able 
to enjoy the same pleasure that every coupon period 
brings to the bondholder of any degree. 

"One of the most attractive features of this plan is 
that with the placing of the order for the purchase of 
the bonds every dollar put in by the members of the 
club begins to DRAW INTEREST at once, the amount 
being determined by the yield of the bonds selected. 

"There is no reason why any individual may not put 
aside a dollar a week and buy a $50 bond all by him- 
self. There are several reputable bond houses which 
sell bonds on the installment plan. So there is really 
nothing staitlingly original about the plan the New Jer- 
sey young men have adopted. Its value lies in the 
getting together — the club spirit. The individual can do 
it acting alone, but the individual doesn't do it very 
often." 

You see, there is the important fact — the arousing 
of the club spirit — getting people to do together what 
they often cannot be induced to do alone. 

How to Deal With Objectors 

I have said that every walk of life has its natural- 
born leaders, and that if you can win thtse leaders over, 
it will make it easy for you to deal with all their followers 
— a very elementary proposition indeed. 



22 HOW TO SELL BONDS 

However, it behooves us now to realize that these 
natural-bom leaders are mainly what they are because, 
unlike most people, they think. And so you must be pre- 
pared to deal with thinkers as well as with people who will 
put their money into your bonds for no other reason than 
that other people are doing it. 

Don't misunderstand me. With the great majority 
of people, you will not have to go into all the technical 
merits of your bonds. In many cases, indeed, it will be for 
you to do the thinking for the people with whom you deal. 
It will be for you to satisfy yourself that your bonds are 
to be unhesitatingly accepted by these people, and for you 
to convince them of that fact simply by your calm, mat- 
ter-of-fact assertion that your bonds are all right. 

In other words, you ought to sell a great many bonds 
indeed simply because people have confidence in you. Yes, 
in a great many cases, all you will have to do will be to 
convince people that they ought to take advantage of the 
opportunity for saving that bonds afford, while you let 
it be taken for granted that the bonds you handle are all 
that bonds should be. 

Remember also that you can fire a candle through a 
deal board when the candle is projected with such velocity 
that the fibres of the wood have no time to resist, and that 
a master salesman can keep up such a rapid fire of earnest, 
enthusiastic selling talk that his prospective customer will 
be won over before he, the customer, has had time to, offer 
any opposition. 

Still, there are the people who think- — and often think 
wrong-headedly, people who are ultra cautious and skep- 
tical, not to say downright suspicious. 

To deal successfully with these people, you first of 
all will need to have at your ready command all the facts 
in connection with the Special Offerings of Beyer & Com- 



HOW TO SELL BONDS 23 

4 

pany in general and in connection with the particular issue 
or issues that you happen to be handling. 

In "Representing Beyer & Company," I told you the 
main facts about this house's Special Offerings in general, 
and I hope you have got or will get these very important 
facts firmly fixed in your mind. As for the facts and fig- 
ures about our particular issues, you of course will care- 
fully study the circular matter we issue in connection 
with them, and if there is anything not quite clear to you 
about them, send to us at once for all the information you 
need. 

But to deal with objectors, "kickers," "chronic 
grouches," etc., you not only will need to have exact in- 
formation at your command, but you will need to exercise 
tact and diplomacy. However, if you are the man I think 
you are, I am sure you will get a lot of pleasure out of 
dealing with these people, since they are the ones who 
really challenge your ability, put you on your mettle and 
give you an opportunity to show what finesse in salesman- 
ship is. 

For example, there is a way of letting a man raise all 
the objections he can think of — of listening to all his 
grievances — of letting him talk himself out — and then of 
quietly starting in, with a clear knowledge of his^ charac- 
ter and circumstances, to sell him a bond. 

The shrewd salesman, of course, always avoids get- 
ting into arguments with people ; and you can always avoid 
arguments simply by listening courteously to what people 
have to say and then being careful not to contradict them 
flatly. No matter how much a man may be in the wrong, 
he seldom will thank you for proving that he is and thus 
making him feel foolish. 

Agree with people, even if you have to strain a point 
to do it. Say "Yes, I know that is often the case, and in 



24 HOW TO SELL BONDS 

the main you are quite right, but" — and so on. It is 
always better to say "Don't you think" than to come out 
with the flat-footed assertion, "I think." There is a way 
of leading people to think as you think without their 
suspecting that you have influenced them. 

There are two kinds of objections that every salesman 
has to face — those that are made in good faith and those 
that are put forward merely as an excuse for not buying. 

The best way to deal with insincere objections is to 
appeal directly to your prospect's self-interest. In other 
words, make a quick counter with some strong, vigorous 
assertion as to how your bonds will fit into his particular 
needs. 

Remember that the nearer a thing comes home to us 
— the closer it is shown to be related to our happiness or 
general satisfaction with life — the greater will our interest 
in it be. 

For instance, if your prospect is a father or a mother, 
you could show how, through your bonds, he or she could 
save up to provide an education for the children. A young 
man, again, could be shown that your bonds provide him 
with the ideal way of saving up to get married. Then a 
very rich man could be shown why he needs your bonds to 
help him keep his investments diversified or to increase the 
average returns on his investments. 

At all event s^ the wisdom is clear of finding out as 
much as possible about your prospect before you go to 
see him^ and of encouraging him to talk about his personal 
affairs when you do see him. 

As soon as your prospect's attitude changes from one 
of indifference to one of interest, you then will be on the 
same level with him, and will then have a chance to get at 
and overcome any real objections that may be in his mind. 



HOW TO SELL BONDS 25 

NeveVy however^ rest content with merely answering 
objections 

As long as you merely are answering objections, you 
are on the defensive, and the man on the defensive merely 
holds his own at the best. If possible, you should turn 
every objection into a veritable reason why your bonds 
should he purchased. At all events, proceed immediately, 
as soon as you have answered an objection, to pile up your 
reasons why your prospect will suffer if he does not 
possess himself of what you have to offer. 

Finally, always keep in mind that "a man convinced 
against his will is of the same opinion still," and that it 
is necessary, not only to get people to consent to take 
bonds, but to get them actually to pay for them and keep 
them. 

Therefore^ after you have persuaded a man to take 
a bond, follow him up to see that no reaction sets it, to 
see that he continues enthusiastic about or remains con- 
tent with his purchase, and that he thus will STAY PUT, 

Objections and Questions You are Likely 
to Hear Raised 

A master salesman does not wait to find out from 
actual experience what objections are likely to be raised 
against what he has to sell. Before starting out, he 
anticipates every imaginable argument against his propo- 
sition, and having his answer ready before his prospect 
has finished speaking, he is fully prepared to knock every 
objection into a cocked hat. 

I now give you a list of the objections and questions 
that you are likely to hear raised, together with what I 
think are the answers. For the most pait I will leave it 
to your judgment to state these facts in the proper way 



26 HOW TO SELL BONDS 

and, when possible, turn them into veritable arguments 
in favor of your proposition. 

1. How Do I Know That Beyer & Company Is a House 
to Be Relied Upon?— That Its Statements About Its 
Bonds Are True?— That If I Start to Buy a Bond 
Through Small Payments It Will Not Fail Before I 
Get the Bond, or Will Actually Deliver to Me the 
Bond When I Have Paid For It? 

Well, I might ask you how you know that, when you 
put money in your local bank, you will ever get it back. 
The reason you trust your money with any bank is that 
you consider that its record and the record of its officers 
make it worthy of trust. You rightly judge that, having 
fulfilled all its obligations in the past, this bank will con- 
tinue to discharge all its obligations in the future. It is 
true that Beyer & Company may be far away in New York, 
and we personally do not know anything about the house 
or its members; but there is, just the same, a safe way to 
find out all about it. You can get a report on it from 
Bradstreet's and Dun's, you can get your own bank to in- 
quire about it from its New York City Correspondents, 
or you can get some friend in New York to look it up and 
tell you all about its reputation in its home city. It is in 
these ways that I have satisfied myself as to the thorough 
reliability and responsibility of Beyer & Company, and if 
you are not content with my investigation, you of course 
can look this house up just as I did. 

2. The Company Issuing Your Bonds Is Too Small a 
Proposition, and Is Too Far Away from Home. 

Experience shows that-what counts is not the size of 
the proposition or its nearness to home, but its intrinsic 



HOW TO SELL BONDS 27 

value. [Here you can enlarge upon the intrinsic merits of 
the particular issue you are handling, and thus turn the 
objection into a veritable reason why your bond should 
be purchased.] 

3. My Bank Advises Me That It Knows Nothing About 
Your Bonds. 

It would be impossible for your bank properly to in- 
vestigate and learn the values of the many small proposi- 
tions that clients may bring it, as they are too numerous 
and would use up too much of the bank's valuable time. 
However, as I can show you, these small propositions have 
unusual advantages for the investor — advantages so great 
that it will be well worth while for you to look into them 
yourself. I do not necessarily mean that you should in- 
spect the property in person, but you can at least make 
a careful study of the facts that my house supplies, and 
through your bank you can get a report on my house, so 
that you may know whether its statements are to be relied 
upon. 

Another way you can investigate personally is by 
writing to some bank in the town where the company is 
situated. This bank undoubtedly will be in a position to 
give you an unbiased opinion on the company, the way it 
is run, the character of its officers, etc. 

4, My Bank Advises Me That It Would Be Better For 
Me to Buy a Bond of a Large Issue Against a Large 
Company, as Such Bonds Are Alv^ays Current, and 
I Can Always Borrow Money On Them From My 
Bank, as Well as Find a Ready Market for Them in 
Case I Should Desire to Sell Them. 

[As this objection raises the whole question as to the 
particular advantages of bonds issued by small corpora- 



28 HOW TO SELL BONDS 

tions, it will be necessary for you, in order to be prepared 
to answer it, to study all that was said on this subject in 
"Representing Beyer & Company." If you will do this, 
you will be prepared to show (1) that these bonds have 
all the tremendous advantages of first mortgage and un- 
derlying bonds and (2) that they are more stable in pri 
If, for any reason, it is not clear to you why these bonds 
have advantages that are tremendous, let us enlighten you 
and enlighten you at once; for objections brought against 
the bonds of small corporations as such are, above all 
others, the ones you can turn into veritable reasons why 
these bonds should be purchased. Any man who raises 
objections to these bonds because they are not "current," 
or are not listed, should have it put up to him good and 
hard as to why he puts money in bonds— whether for in- 
vestment or for speculation. If a man is sincere in his 
wish to be conservative, is satisfied with an honest invest- 
ment return such as 6% and is not secretly wishing to 
make additional profits on price fluctations, then these 
bonds of small corporations are for him ideal, especially 
when, as in our case, the underwriters of the bonds stand 
ready to loan money on them or buy them back.] 

5. What Is a Bond? 

A bond is an interest bearing obligation issued by a 
corporation in which the corporation promises to pay a 
fixed amount to the holder at a specified time. It is 
usually secured by a mortgage on the property of the 
company. Instead of one bank or trust company or in- 
dividual taking a mortgage of $100,000 or $1,000,000 or 
more on a railroad, telephone system, electric light plant 
or other corporation, a large number of banks, trust com- 
panies and private individuals each take parts of such 
mortgage. These mortgages are divided into parts of $50, 



HOW TO SELL BONDS 29 

$100, $500, $1,000, $5,000 and $10,000 and are called 
mortgage bonds. 

6. Why Are Bonds Sold? 

Bonds are first sold to secure money for construction 
of railroads, electric light plants, telephone systems, etc. 
After the company has been in operation, bonds are then 
sold to make improvements, extensions, additions, etc. 
Bonds of these companies are afterward' bought and sold 
the same way as any kind of merchandise. 

7. What Is the Difference Between a Mortgage Bond 
and a Stock? 

A Mortgage Bond is a mortgage on the company's 
property and a promise to pay by the company. A stock 
is simply a share in the profits of the company . 

8. Who Buys Bonds? 

Bonds are bought by practically all banks, trust com- 
panies, insurance companies, and other large institutions 
and individuals who have money not in active use in their 
business. This is true because bonds are the safest, sim- 
plest, cashable kind of investment paying a fair rate of 
interest. 

9. Why Don't the Wealthy People Buy All of the Bonds? 

The United States is growing and developing so 
rapidly that the money of the comparatively few mil- 
Honaires and banking institutions is not sufficient to pur- 
chase all the bonds which are necessary to finance the 
development and improvement of railroads, electric light 
plants and other corporations. 



30 HOW TO SELL BONDS 

10. Can One Buy Bonds That Have Been Paying Interest 
for Several Years? 

Bonds may be purchased which have been paying 
interest from one to thirty years and over. "Seasoned'^ 
bonds are bonds of companies which have been operated 
successfully for a number of years. The value of their 
properties is largely in excess of the bond issues and 
they have for several years earned many times their in- 
terest requirements. 

11. If I Buy a Bond, What Becomes of My Money? 

The money a corporation receives from the sale of 
its bonds is used in making improvements and extensions 
to supply the increasing demand for its products. When 
a company's bonds have been sold, the bonds are then 
bought and sold by individuals. 

12. Are Small Bonds Issued Because the Wealthy People 
Do Not Buy Bonds Now? 

Wealthy people are buying more bonds than ever 
before. The demand for money to enlarge and extend 
telephone systems, electric light plants and railroads is 
greater than the supply from the few wealthy people. Thus 
the people with a few hundred dollars can be allowed a 
part in this great development of our country and at the 
same time get the safest investments in the United States. 

13. Why Do Bonds Having the Same Rate of Interest 
Sell at Various Prices? 

When a bond is first issued the selling price is effected 
principally in two ways. First, the rate of interest which 
the company issuing the bond is willing to pay to bor- 



HOW TO SELL BONDS 31 

row the money. Second, the current selling price for 
bonds similar to the one the company is issuing. The 
selling price of seasoned bonds is determined simply by 
demand and supply. As in the case of a popular bond 
which has been given considerable publicity the demand 
is great and if the supply cannot fill this demand, the 
bonds naturally will increase in price. 

14. Can I Sell Bonds at Any Time? 

Bonds, like sugar and butter and any other generally 
desired product, may be sold at any time. It is just as 
much the business of the banker to sell bonds for his cus- 
tomer as it is to sell bonds to him. When a $100 bond 
comes due it is payable at $100. Any time before the 
bonds are due, they can be sold at the prevailing market 
price. 

15. Why Don't All $100 Bonds Sell at Just $100? 

As explained in Answer No. 13, bonds are subject 
to demand and supply and, therefore, their price changes 
according to the demand and supply at any time. 

16. Where Do I Get My Interest? 

The interest on a bond is payable on fixed dates, 
usually, semi-annually. In the case of a registered bond, 
the interest is paid by a check from the Company, mailed 
direct to the person in whose name the bond has been 
registered. In a coupon bond, where interest is payable 
semi-annually, there are attached to the bond small 
coupons each representing six months' interest on the 
bond. When the interest date arrives, the owner of the 
bond detaches the coupon. This coupon is just the same 
as the Company's check and may be deposited in any 



32 HOW TO SELL BONDS 

bank as an ordinary check. On a 5% coupon $100 bond 
where the interest is payable semi-annually each coupon 
represents $2.50, payable on the first day of the months 
specified. 

17. Why Have the Cities Had So Much Trouble Selling 
Their Bonds Lately? 

City Bonds seldom pay over 4<l/^% and unless money 
is very plentiful, bond buyers consider 4^/2% too low. 
There are so many good, safe bonds paying as high as 
6% that City Bonds naturally would not sell very rapidly 
at the present time. 

18. Can the Rate of Interest On a Bond Be Changed? 

The rate of interest on a bond cannot be changed. 
If you buy a 6% bond, the company upon which your 
bond is a mortgage cannot change it from 6% to 4% or 
to any other rate than 6%. 

19. What Is "And Interest"? 

All bonds are sold at a price "and interest." For 
example, you buy a $100 bond at 99 and interest. Tliis 
means that you pay $99 plus the interest which has ac- 
cumulated to date from the last coupon date. If the 
coupons are payable in January and July, and you buy 
this bond on April 1st, you pay the interest from January 
which is three months. On July 1st you cut a coupon 
which represents the interest since the 1st of January 
or six months, thereby getting back the three months in- 
terest that you paid on April 1st. [See also page 37.] 

20. What Is Yield? 

Yield is the rate of interest which you receive on 
your money invested should you hold the bond until it 



HOW TO SELL BONDS S3 

is due. For example, you buy a 5% bond at 90 which 
u due in ten years. Each year you receive 5% on $100, 
«^hich amounts to $50, making the average rate of interest 
nearly on the money invested about 5%%. When the 
wnd is due you receive $100, which is $10 more than 
you paid for it. This is equal to $1 a year. Adding the 
$1.00 to the $5.50 gives you a yield of $6.50, which is the 
net return each year. (This is an approximate yield. 
To figure the exact yield elaborate statistical tables are 
necessary.) 

Why Business Men Should Buy Bonds 

One objection to buying bonds that you frequently 
will hear raised by business men is that if the profits 
yielded by a business are put back into the business, they 
will earn say from 15 to 20%, whereas if these profits 
are invested in bonds they earn only about 5%. This 
objection is so foolish that you can render no greater 
service to the business men among your clients than by 
showing them just why it is foolish. 

The best summary I have ever seen of the reasons 
why business men should buy bonds is found in an article 
by E. W. Keever in Moody's Magazine, and I am here 
going to reprint most of this article in the hope that you 
will study it carefully. 

Mr. Keever shows that profits "put back into the 
business" are no longer real profits, but are subject to 
business risks, that surplus invested in standard bonds 
is a liquid asset of incalculable value in emergencies, and 
that there are many ways in which such investments 
strengthen the business man's position. Don't fail, then, 
to read what he says : 

American bond houses have been the most potent 
factor in making America a nation of investors. By 
their campaign of educative advertising, and by their 



34 HOW TO SELL BONDS 

corps of bond salesmen, themselves experts in values, 
the public is being taught the difference between specu- 
lation, which promises large returns and almost in- 
variably results in loss, and investment which insures 
regularity of income and safety of principal. More 
and more the investor is turning from the wild cat 
schemes of promoters to the less allur'ng but infinitely 
safer opportunities offered through the agency of tne 
great retail bond houses. 

Always looking for new worlds to conquer, some of 
the more progressive of these firms have begun an 
active campa:gn to convince the business man of the 
extent to which bonds are an asset in his business. 
The average hard-headed business man, when ap- 
proached on this subject, is apt to agree that it would 
be desirable to own bonds, but says, "I put all my 
profits back into the business, where it will earn 15 
to 20 per cent, so why should I invest in bonds which 
would only bring me 5 per cent?" 

A brief investigation of the plan of Commercial Re- 
serve, as used by a house which the writer has in 
mind, will soon convince him that his argument is to 
a certain extent specious, and there are some real ad- 
vantages in the plan which the bond man has out- 
lined to him. 

In the first place, let us suppose the manufacturer 
makes a net profit of ten thousand dollars on the raw 
material he has purchased and turned into the finished 
product. Now, if he takes that $10,000 and puts the 
whole amount back into more raw material, it is no 
longer real profit, because he is subjecting it to all 
the risks of the business. It is simply so much w^orking 
capital. The only real true profit that he can go home 
at night and tell his wife about is that portion of his 
$10,000 that he takes out of his business and invests in 
something entirely outside of it. The inexperienced 
may not believe this statement, but ask the man who 
has been in business for twenty years and has seen 
two panics, and he will tell you that his real profits, 
. the ones he expects to live on in old age, are those 
sums invested in outside things, such as life insurance, 
real estate, or bonds. 

And of these three forms bonds are by far the best 
for the investment of business surplus. They are more 
marketable than real estate; if carefully chosen they 
are equally secure, and as collateral for loans they are 
unsurpassed. 

This brings us to the consideration of the more im- 
mediate benefits of bonds as a commercial reserve. The 
man who has a surplus in bonds has an insurance fund 
against unforeseen disaster. If a strike temporarily 



HOW TO SELL BONDS 35 

ties\|ip his plant, or a newi invention compels large ex- 
penditures for improved machinery he can resort to the 
commercial reserve for the necessary funds. He has 
always on hand liquid assets whose value is not in the 
least affected by the state of his business. Under 
modem business administration the practical import- 
ance of such a fund is evident. 

A further advantage of commercial reserve arises in 
periods of business over expansion. There are times 
when the merchant sees opportunities to buy at a large 
discount for cash. The seller must have money at any 
price. Such opportunities usually come when money 
is tight, and credit strained. The merchant is carry- 
ing his full line at the bank and it is impossible to float 
commercial paper. At such times hisi bonds are worth 
all they cost. He can at once take them to any bank 
and borrow 80 to 90 per cent of their market value 
and thus buy up his bargain. It is simply that he has 
cash and the other man hasn't, and **real money talks 
loudest every time." 

A striking example of the value ot sl commercial re- 
serve when such opportunities present themselves is 
seen in the history of! the Standard Oil Company, one 
of the chief causes of whose wonderful success has been 
the consistent maintenance of a big reserve in cash 
and easily negotiable securities. By means of such a 
reserve, the Standard Oil Company has been able to 
get into new oil fields when its competitors were handi- 
capped by lack of cash and to take over competitors 
weakened by lack of capital, and to improve its posi- 
tion in many other ways. 

A corollary to the above is the well-known fact that 
in panic times the public is not bankrupt but only 
hoarding, and is always ready to take advantage of 
bargain prices in necessities. Then the forehanded 
merchant puts in a side line or "understudy" consist- 
ing of these necessities, bought at a great reduction for 
cash and finds that his bond reservei has really earned 
him many times his paltry 5 per cent interest. "But," 
the business man replies, "that is all very well, but 
such opportunities are rare. I want to know how bonds 
will help me to-day." 

One answer to that question is found in the analysis 
of interest rates in New York in the last five years. A 
comparison extending over this period of the average 
rates for loans of four to six months* time, based on 
collateral security and loans of the same duration, 
based on single name paper, shows that each year the 
loans on collateral averaged from 1 to 1% per cent 
less interest than those made on single name paper. 
This was for loans of fixed duration and did not include 



36 HOW TO SELL BONDS 

call loans made on Stock Exchange collateral. The In- 
ference is obvious. 

Again, in the form the business man fills out for his 
bank when applying for a loan, the space marked 
"Other Assets" is usually left blank. A canvass of the 
commercial banks of New York shows that whenever, 
under Other Assets, the banker finds listed some high- 
grade bonds, he becomes unusually favorable to that 
particular borrower. In the eyes of the banker the 
borrower is showing some frwe profit, and the result is 
that when the bank is chary of extending accommo- 
dation in general, credit will be given to the man whose 
statement shows profit that is real and assets that are 
truly liquid. 

This brings us to the relation of quick assets to 
quick liabilities. In every city we find a goodly num- 
ber of merchants and manufacturers whose fixed assets, 
such as buildings, equipment, etc., are large, but whose 
quick assets are nowhere near the proper proportion of 
their quick liabilities, nor will brick and mortar or bills 
receivable settle a-ccounts payable when they fall due. 
As one writer expresses it colloquially, "cash and quick 
assets are the mules that pull a business uphill," and 
a large number of the two or three hundred business 
failures every week are due to lack of realization of 
that very fact. 

Bradstreet in their Januarj^ analysis of the business 
failures in the United States during 1912, credit 29.7 
per cent of those failures to "lack of capital" and 16.5 
per cent to "specific conditions." Out of the total of 
46.2 per cent due to these causes, a respectable per- 
centage is evidently due to the bankrupt concerns fail- 
ing to have the quick assets to meet their quick obliga- 
tions. Nothing but cash will meet these obligations, 
and bonds are the best form of carrying this very 
desirable fund of quick assets with which to meet con- 
tingencies. 

"Well," replies the business man, "you have convinced 
me that all my profits should not go back into my busi- 
ness, that bonds are a good form of business insurance, 
that I may be able to make money with them in hard 
times, and that in good times I can borrow cheaper 
because I have them, but I can^t afford to take five or 
ten thousand dollars out of my business at one time 
to buy bonds." 

The commercial reserve plan has anticipated this ob- 
jection, and offers two alternatives. Either the firm 
can set aside a certain sum weekly or monthly, and 
when a sufficient amount has accumulated purchase 
the bond outright, or it can buy on the partial pay- 
ment plan» 



HOW TO SELL BONDS 37 



**And Interest'' Fully Explained 

As this subject of "and interest'' is not fully under- 
stood even by many experienced business men, I wish you 
would read and carefully study the following article by 
Francis Theodore Tilton, which appeared in Investments 
Magazine : 

"To the price quoted on interest-bearing obligations, 
such as bonds, accrued interest must be added. This 
is sometimes confusing, and many people not versed in 
the subject are inclined to think that undue advantage is 
being taken of them when the interest is 'tacked on,* 
but a little consideration of the subject will suffice to 
make it clear that this practice is fully justified, and 
is in fact for the investor's own protection. 

**The interest ta bonds is paid at definite intervals, 
generally semi-annually. In the case of coupon bonds, 
little certificates or coupons covering each and every 
interest payment are attached to the bond, and when 
the date upon which they become due arrives, they 
are detached and upon presentation paid by the com- 
pany, this payment covering the interest from the last 
Interest date, either for six months or three months, as 
the case may be. It can be readily seen that if the 
holder of a coupon bond sells his bond between interest 
dates he not only surrenders the certificate calling for 
the principal sum, which is paid to the holder of the 
bond at maturity, but also the engraved coupons, also 
payable to bearer, calling for all future interest pay- 
ments. 

"If the transaction occurs say midway between the 
Interest dates, a proportionate amount of interest is due 
to both the seller and the purchaser, according to the 
number of days their respective money is invested in the 
security. For instance, if the interest is payable every 
six months and the transfer of ownership occurs three 
months after the last interest date, the seller of the 
bond is entitled to three months* interest and the pur- 
chaser of the bond to the same amount of interest, the 
division being equal for the reason that the period is 
equally divided. 

"When the actual transfer of the security occurs it 
can thus be seen that the seller forfeits his ability to 
collect the interest due him, as he surrenders to the pur- 
chaser, who generally is and will always remain a 
stranger to him, the only possible means of collecting 



38 HOW TO SELL BONDS 

it from the company, namely the small coupon attached 
to the bond calling for the interest for the full period. 
Therefore, in order to be just to both the purchaser and 
the seller, the question of interest is definitely settled 
at the time of transfer of ownership by the purchaser 
giving the seller the amount of interest due him, which 
will, of course, be refunded on the next interest date 
when the new holder cashes the coupon for the full 
period. 

"In the case of registered bonds, or bonds made pay- 
able to the individual named therein, a proper registra- 
tion of ownership is made, when a transfer occurs, 
whereupon the new holder is not only entitled to the 
principal sum when due, but also to the next and all 
subsequent interest payments. The adjustment of the 
accrued interest is, therefore, made in the same man- 
ner upon transfer as in the case of the coupon bond. 

''Tables are prepared showing the interest at various 
rates for any period, so that it is not a difficult process 
to find the amount of accrued interest due. 

"It was not until January, 1909, that the New York 
Stock Exchange established the ruling that all interest 
bearing bonds ti*aded in on the Exchange should be at 
an "and interest" piice, although bond houses had previ- 
ously adopted this method when trading among them- 
selves outside the Exchange. 

"Prior to that time it was necessary to figure and 
include in the quoted price the amount of interest 
which was accrued. The value of the bond would in- 
crease each day by the addition of accruing interest and 
by the time the interest was payable, the market price 
of the security would have increased several points, all 
of which was suddenly lost immediately after the pay- 
ment of the interest. The ordinary investor generally 
overlooked the fact that these erratic fluctuations in 
the price of his security were due to the amount of in- 
terest accrued to which he was entitled in the natural 
order of events. Consequently, he was often tempted to 
either sell and take the apparent profit, or sell because 
of the sudden decline which to him indicated some vital 
and newly discovered weakness in the security, all of 
which was of course generally contrary to his best 
personal interests. 

"In the case of a five per cent bond with a semi- 
annual interest payment of $25 the bond would show a 
rise between interest dates, provided there was no 
change in the value of the principal of the security 
itself, of say 2% points, to cover accruing interest, after 
the payment of which the bond would show a sudden 
decline of an equal amount, whereupon it would again 
commence to increase in value until the next interest 



HOW TO SELL BONDS 39 

date was reached, with the resultant sudden decline, 
and so the process was repeated. The standing of the 
bond was in no way altered by these unnecessary fluctu- 
ations, but they were sufficient to confuse the unsus- 
pecting bond holder, many times to his loss and to the 
gain of those who followed the subject professionally. 
It was, therefore, decidedly to the benefit of the investor 
that the interest was made a separate item from the 
quotation, based on the par value of the security. 

"Sometimes bonds are sold "flat" — that is, without any 
interest being added. This is only in the case, however, 
of bonds that are not yielding interest, such as bonds 
in default. As this is the exception the word "flat" in 
such cases always follows the quotation, otherwise the 
price for bonds is understood to be "and accrued in- 
terest." 

'*In the case of stocks, however, there is no addi- 
tion to the quoted price for dividends, as these are never 
payable or due to the stockholders until actually voted 
by the directors, while the interest on bonds is an 
actual obligation which daily accrues and which must 
be paid the same as the principal. Dividend-bearing 
stocks, therefore, generally appreciate in value previous 
to the payment of the dividend, and then decline when 
the dividend is deducted, or when they sell 'ex-divi- 
dend.' 

'*0f late, in the marketing of cumulative preferred 
stocks there have been cases where the price has been 
'and accrued dividend,' which have been justified in 
their particular cases, but it is doubtful whether the 
custom will ever be applied to the prices of stocks 
generally, as there are not the same reasons for it as 
in the case of bonds." 

Why Bonds are Better than Real Estate 
Mortgages 

{From The Magazine of Wall Street.) 

There is no necessity of depreciating in any way the 
value and desirability of direct mortgages on real estate, 
but the sound corporation bond has a number of advan- 
tages which the investor in mortgages would do well to 
ponder. 

1. The equity above the value of a mortgage is rarely 
over 100 per cent, and usually not more than 70 per cent. 



40 HOW TO SELL BONDS 

It is easy to select bonds where the margin of safety over 
the principal of the bonds is 1,000 per cent or more. 

2. The net revenue from real estate is possibly three 
times the amount of the interest on the mortgage. Many 
bonds are protected by earnings large enough to pay the 
interest on them six to ten times over. 

3. The expenses attending the foreclosure of a mort- 
gage are large, and the holder is put to a great deal of 
trouble. If bondholders ai^e compelled to take over the 
property on which their bonds are based, the expense 
and trouble to each individual is small, and his interests 
are well protected. 

4. Good bonds may be instantly converted into cash, 
with small commission charges. This is far from being 
true of even the best real estate. 

5. Bonds can be used as collateral for a temporary 
loan. Mortgage cannot be readily used in this way. 

6. The length of term for bonds varies so widely that 
the investor can adjust his dates of maturity to his own 
needs, from one year up. It is usually impossible to do 
this with a real estate mortgage. 

7. Bond values are not usually dependent on local 
conditions, while real estate values nearly always are. 

8. Bonds can often be bought at prices which show 
excellent possibilities for the increase of the principal, 
in addition to regular interest. Mortgages do not pos- 
sess this advantage, 

9. The permanent investor can buy bonds running 
fifty years or more, thus avoiding all trouble and expense 
of transfer. Few mortgages run more than seven years, 
and many only three. 

10. The bondholder gets his interest when due. The 
owner of a real estate mortgage must allow thirty days' 
grace, and in practice often allows much more than that. 



HOW TO SELL BONDS 41 

11. The expenses of collection and oversight are as 
a rule much heavier on each one thousand dollars invested 
In mortgages, than on the same sum put into bonds. 

12. The foreclosure of a mortgage, if it becomes 
neecssary, is a very disagreeable and unpopular duty. 
This difficulty does not arise with bonds, even though the 
corporation should default the interest. 

Books You Ought to Read 

As I pointed out in my foreword, every bond sales- 
man ought to be a student, and here are some books that 
every bond salesman ought to read that he maj^ be prop- 
erly qualified to answer the questions of his clients and 
render them the best service. Any or all of these books 
can be obtained through my house at the regular price: 

How to Invest Money Wisely: 

By John Moody. One of the first really practical books on 
investment. In it John Moody shows the investor how to apply 
the plans of investment to his own case, and explains fully 
but clearly the principles of diversified Investment which he 
has been studying for so many years in connection with his 
work as an analyst. These principles have been adopted by 
many institutions and thousands of individual investors with 
great profit. Flexible leather. 200 pages. $2.00. Postage, 
10 cents. 

Work of the Bond House: 

By Lawrence Chamherlain. The first exposition ever made of 
the functions performed by the American bond house in turn- 
ing into channels of productive industry the savings of the 
investing public. Explains the buying of municipal, railroad 
and corporation bonds, the selling of bonds from the bankers' 
viewpoint and the investors' viewpoint, the advisory functions 
of a bond house and its protective and banking functions. 
Tells also how to judge the value of bonds. Cloth. 160 pages. 
$1.35. Postage^ 10 cents. 



42 HOW TO SELL BONDS 



Smith's Financial Dictionary: 

By Howard Irving Smith. This book omits nothing essential 
to a comprehension of financial transactions. It defines and 
explains alphabetically and at length the whole range of bank- 
ing, money, credit, stocks and bonds, commercial paper, invest- 
ment and speculation in stocks and commodities and the mone- 
tary systems of the world. It contains the most accurate tables 
of foreign exchange in existence. It gives compound interest 
tables, bond yields, and is indispensable in any financial library. 
Blue cloth, gold title, 527 pages, 9x6 inches. $2.00. Postage, 
20 cents. 

Investors' Primer: 

By John Moody. In this book John Moody defines in clear and 
simple language the terms and phrases used in the investment 
and banking business and explains the difference between 
stocks and bonds and between the various kinds and types 
of bonds. He also shows how bonds are issued by the big 
corporations and how they reach the public through the hands 
of the Stock Exchange and the Investment Banker. A book 
every investor ought to have before he attempts to buy or sell 
stocks or bonds. Cloth. 150 pages. $1.00. Postage, 10 cents. 

Pitfalls of Speculation: 

By Thomas Gihson. In this book Thomas Gibson, the well- 
known stock market expert, explains in a way that everybody 
can understand, the causes of the great market movement and 
shows as far as possible how to foretell them. The reader of 
this book will be able to avoid the traps set by unscrupulous 
brokers, and while it will not help him to get rich quick it 
will save him from unnecessary loss of money and sleep. 
Cloth. 130 pages. $1.00. Postage, 10 cents. 

The Investors' Catechism: 

By Marc. M. Reynolds. How are Stocks manipulated? What 
is a bucket shop? How stocks are bought on margin. Mean- 
ing of puts, calls and privileges. What is a Debenture Bond? 
How to legally endorse a stock certificate. What are bank 
clearings? What is a bear? A bull? What is the curb mar- 
ket? What is a Wall Street deal? What is a funded debt? 
These and thousands of other questions important to the in- 
vestor are answered in "The Investors' Catechism." This book 
is invaluable to the investor unfamiliar with the ways and 
methods of Wall Street. Bound in cloth, with gilt title. $1.00. 
Postage, 10 cents. 



HOW TO SELL BONDS 43 



How to Invest Money: 

By George Garr Henry, This book deals with the different 
forms of investments in a clear and comprehensive manner. 
The advantages and disadvantages of the different classifica- 
tions of bonds are discussed very plainly. The headings of 
the chapters contained in this book are as follows: "General 
Principles of Investment," "Railroad Mortgage Bonds," "Rail- 
road Equipment Bonds," "Real Estate Mortgages," "Industrial 
Bonds," "Public Utility Bonds," "Municipal Bonds," "Stocks," 
"Market Movements of Securities." Bound in cloth. 75 cents. 
Postage, 10 cents. 



A Lesson in Thrift 

Showing the Good That Every Bond Salesman Can Do. 
{By C. M, Keys in Glover sville Herald.) 

A merchant in a small country town in New York State has 
a son who has been a whole lot of trouble. He is not a bad 
sort of fellow, but is haphazard and easy going. His father, 
who used to work for $2.00 a week and his keep in his early 
days, and who thinks a good day's work begins at half past 
seven in the morning and ends at the same hour at night, is 
worried constantly because his son never could cultivate the 
habit of saving money and never seemed able to get a decent 
idea of what money was for. The reason, of course, lay in the 
fact that when the boy was bom the family was in fairly pros- 
perous circumstances and when he grew old enough to spend 
money there was plenty of money to spend, and he did not have 
to do any particular thinking about where the money came from. 

It was when the boy was about fourteen that his father 
began to try to teach him something about money. By the time 
he was sixteen, he knew nothing at all about it, and his father 
had a kind of conviction in his mind that he would never have 
any sense in this matter. Apart from his happy thriftlessness, 
the boy was made of good stuff, honest, clean, straightforward. 
It seemed to his father and his friends a very great pity that 
he lacked this one element which is such a powerful factor in 
making of a real American character. 

About the time the boy was seventeen the father began all 
sorts of experiments to teach the habit of thrift. He started a 
savings bank account, which went all right for a few months, 
but which was neglected after then and became a bone of con- 
tention between the father and son. He took out a life insur- 
ance policy which was also all right as far as it went, but it 
did not go very far because it required only two annual pay- 
ments. Whenever he got a good chance the father preached the 



44 HOW TO SELL BONDS 

habits of thrift in the old-fashioned way, but it was very evident 
that, with the best intention, he got little from the sermons. 

One recent experiment along this line in the education of 
the boy is the subject of this article. The writer does not know 
whether it will be a success or not, and puts it down merely as 
a matter of record rather than as an experiment to demonstrate 
anything. 

It came about through a visit of a bond salesman. This 
young man happened to be marooned in the town one winter for 
a day on account of a washed-out bridge on the railway line, 
and the merchant who had done some business with him, invited 
him to come to the house. They talked shop in the evening, 
the salesman telling the merchant a lot of more or less intimate 
details of the bond business, and the boy became more and 
more interested. Amongst other things that the salesman men- 
tioned was a little experiment that his house was making selling 
quiet bonds on the installment plan. At first he dwelt upon the 
buying of bonds by business concerns as a sort of sinking fund. 
Then he came down to the buying of a single bond to be paid for 
$100 at a time at intervals convenient to the buyer. 

An idea struck the merchant. He said nothing about it at 
the time, but drew the salesman on to tell about the class of 
people who bought bonds in this way from his house, how they 
got along with it, and how it resulted to the buyer. The sales- 
man seemed perfectly willing to talk about his business, and 
went into elaborate details, telling how people had gotten into 
the habit of saving money to pay off their installments and the 
pleasure they got out of completing their payments and starting 
new circles of investments. The boy was evidently more and 
more interested in these personal stories and himself got to 
asking a lot of questions. 

The next day the father made a suggestion to the son. He 
had figured out about how much spending money the young man 
had, and what he ought to be able to save out of it on a very 
conservative estimate. The suggestion was that he would him- 
self pay $100 down on a bond for the boy's account and that he 
would pay in addition $50 a month for as long as the boy would 
keep on saving a similar amount to be applied to the purchase 
of a bond. 

That was two years ago. It is still carried on, the only dif- 
ference being that now the young man is himself paying $75 a 
month and his father is paying $25. According to the accounts 
the last thing in the world that this young man would think of 
stopping is this monthly bond purchase. In many respects he is, 
according to his father, getting to be mean and parsimonious in 
the first couple of weeks every month until he sees that he is 
certain to have enough money to make his payments. 

Of course, this same result might have been accomplished 
in a dozen other ways, but the fact remains that it has been 
accomplished so far, satisfactory, by means of an installment 



HOW TO SELL BONDS 46 

bond purchase. The merchant, who is himself a good investor, 
is delighted to have awakened in the young man an instinct for 
the accumulation of property by the old-fashioned patient process 
of saving money and putting it to work conservatively. The 
young man himself realizes what he never realized before, that 
the mere habit of saving carries with it much more satisfaction 
than the mere habit of spending. If the proposition works out 
as it now looks to be working out, it may eradicate the one 
fundamental weakness in the yoimg man's character and at the 
same time start him. on the high road to wealth. At any rate 
the merchant considers the bond buying habit the best antidote 
of which he has any knowledge, to the poison of thriftlessness. 



^^IL^OUR time is your capitad. 
\ Learn to be economical of 
it and dexterous in the use 
of it If, at the close of each day, 
you will think over what you have 
done, and will know how much time 
you have wasted, so far as any 
desirable results are concerned, you 
may be led to keep a stricter watch 
upon the hours of the next day as 
they slip by. You can do a great 
work if you never will let a day pass 
without gathering some valuable 
result ; and you will be surprised, at 
the end of the year, by the progress 
made/' 

*The only way to make a good 
showing during any year is to begin 
at the very beginning and keep up 
unremitting and energetic efforts 
until the end of the year; to make 
every day count, and never permit 
yourself to rely upon the delusive 
hope that another month may restore 
what the preceding one has lost/' 



